Many a times, we read in newspapers about the “sin tax”. Which among the following is / are correct statements with this reference:
1. A sin tax is usually levied on products such as cigarettes, tobacco and soft drinks
2. Sin tax helps the society to reduce the negative externalities
Select the correct option from the codes given below:

Answer: [C] Both 1 & 2

Both the statements are correct in this question. Sin tax refers to the tax levied on products such as cigarettes, tobacco, wine and soft drinks, or activities such as gambling, which are deemed to be undesirable by the society.

This question is a part of GKToday's Integrated IAS General Studies Module